the mexican economy investment grade or peso bubble? jorge g. gonzalez trinity university
TRANSCRIPT
![Page 1: The Mexican Economy Investment Grade or Peso Bubble? Jorge G. Gonzalez Trinity University](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649f2b5503460f94c45b23/html5/thumbnails/1.jpg)
The Mexican EconomyInvestment Grade or Peso Bubble?
San Antonio BusinessSan Antonio Business
and Economics Societyand Economics Society
Jorge G. Gonzalez
Trinity University
![Page 2: The Mexican Economy Investment Grade or Peso Bubble? Jorge G. Gonzalez Trinity University](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649f2b5503460f94c45b23/html5/thumbnails/2.jpg)
The events of 2001
• Economic slowdown in U.S.
• Mexican government gridlock
• Great relations with U.S.
• Decline in the price of oil
• September 11th
• Crisis in Argentina
• Yes to the World Cup!
![Page 3: The Mexican Economy Investment Grade or Peso Bubble? Jorge G. Gonzalez Trinity University](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649f2b5503460f94c45b23/html5/thumbnails/3.jpg)
Mexico’s Reaction
• ¿Peso’s debacle?
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Exchange RatePesos per U.S. Dollar
456789
1011
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Source: Banco de México www.banxico.org.mx
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Exchange RatePesos per U.S. Dollar
456789
1011
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Source: Banco de México www.banxico.org.mx
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Mexico’s Reaction
• Peso’s debacle?
• Capital flight?
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Foreign Direct InvestmentBillions of Dollars
2.64.8 4.4 4.4
11.0 9.5 9.2
12.811.9
12.514.2
24.7
0.0
5.0
10.0
15.0
20.0
25.019
90
1992
1994
1996
1998
2000
Source: Banco de México www.banxico.org.mx
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Mexico’s Reaction
• Peso’s debacle?
• Capital flight?
• Economic crisis?
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Real GDP% Change
4.4
-6.2
5.26.8
5.03.6
6.6
-0.3
-8.0-6.0-4.0-2.00.02.04.06.08.0
1994 1995 1996 1997 1998 1999 2000 2001
Source: Banco de México www.banxico.org.mx
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Mexico’s Reaction
• Peso’s debacle?
• Capital flight?
• Economic crisis?
• Fiscal crisis?
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Government BalanceBalance / GDP
0.2 0.0 0.0
-0.7
-1.2 -1.1 -1.1-0.7
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1994 1995 1996 1997 1998 1999 2000 2001
Source: SHCP www.shcp.gob.mx
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Mexico’s Reaction
• Peso’s debacle?
• Capital flight?
• Economic crisis?
• Fiscal crisis?
• Inflationary spiral?
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Inflation
7.05
51.97
27.70
15.7218.6112.32
8.964.40
0.00
10.00
20.00
30.00
40.00
50.00
60.00
1994 1995 1996 1997 1998 1999 2000 2001
Source: Banco de México www.banxico.org.mx
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Bumps in the road?
• Super Peso
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Inflation Differential vs. Exchange Rate
1995 1997 1999 2001
0
100
200
300
400
Inflation
Exchange Rate
295
188
Source: Banco de México www.banxico.org.mx
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International TradeBillions of Dollars
94 -
I95
- I
96 -
I97
- I
98 -
I
99 -
I
00 -
I
01 -
I
10
20
30
40
50
Exports
Imports
Source: Banco de México www.banxico.org.mx
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¿Piedras en el camino?
• Super Peso
• U.S. economy
• Political gridlock
• Income Inequality and Poverty
![Page 18: The Mexican Economy Investment Grade or Peso Bubble? Jorge G. Gonzalez Trinity University](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649f2b5503460f94c45b23/html5/thumbnails/18.jpg)
The Mexican EconomyInvestment Grade or Peso Bubble?
San Antonio BusinessSan Antonio Business
and Economics Societyand Economics Society
Jorge G. Gonzalez
Trinity University
![Page 19: The Mexican Economy Investment Grade or Peso Bubble? Jorge G. Gonzalez Trinity University](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649f2b5503460f94c45b23/html5/thumbnails/19.jpg)
The Mexican EconomyInvestment Grade or Peso Bubble?
San Antonio BusinessSan Antonio Business
and Economics Societyand Economics Society
Jorge G. Gonzalez
Trinity University
www.trinity.edu/jgonzal1